As a sub-sector of the US real estate market, the self-storage industry reached a value of $87.65 billion in 2019. Real estate experts believe by the year 2025, the figure will increase further to $115.62 billion.
The self-storage industry is continually catching on in the United States primarily due to urbanization and improved economic outlook in the last eight years. Urban living translates into expensive spaces and more renters moving around to find the most suitable apartments.
These dwellings are usually quite small, and as a result, this group of people looks for alternative areas to keep most of their remaining possessions – that’s where the self-storage industry comes in.
Repurposing Vacant Buildings
Many owners of unoccupied buildings find the self-storage industry a viable business to venture into. Usually, these vacant buildings’ groundwork consists of steel and sometimes brick facilities, making them suitable for this business. These dormant buildings are given the boost and become profitable storage facilities.
Moreover, due to land constraints, it becomes easier to convert vacant and dormant buildings into storage facilities. Usually, if demand is high and economic conditions are favourable in a particular market, an existing building becomes a suitable storage project option. In North America for instance, third-generation properties are many, and their owners resort to this business to keep the structures functional.
Safety, Security, and Ease of Use
For many owners and end-users of self-storage facilities, convenience, safety, and security are paramount. Consumers prefer premium spaces and easy access to enhance the experience. Without these, a self-storage business loses its appeal.
For example, strict camera monitoring, electronic keypad, biometric entry, and climate-controlled storage units are features people prefer. The more upgraded features, the more clients you will have, and that translates into higher revenue.
A Practical Business Venture
Over a period, people would require extra storage due to acquiring too many items or finding a secure place of storage. Therefore, a problem-solving entrepreneur would want to take on the risk of finding a solution to the individuals’ storage needs. It is this practicality of the self-storage industry that attracts many entrepreneurs.
An external storage facility accessible to them at their convenience is an option such individuals would want and find resourceful. It gives them the option of saving keepsakes, furniture, and other possessions they usually cannot move around with in a secure location. They can even pass their storage unit on to a next of kin.
Comparatively Low Rent Rates
The self-storage market designed a competitive rent structure to stay in business. Admittedly, rent is an essential feature of any commercial housing industry, but providing economical rates while still growing requires patience and skill. In the United States, a rent survey revealed that the self-storage industry charges the least usage rate. Right below is the list of the breakdown:
- Retail space: $16 to $20 per square foot
- Office space: $14 to $24 per square foot
- Self-storage: $6.5 to $12 per square foot
- Multi-family space: $7.5 to $12 per square foot
From the list above, you will realize that self-storage is the least charged rental space, explaining why it has become lucrative. However, prices and rates will vary depending on the location, size, and amenities available at each facility.
Decreasing House Sizes
In the last ten years, the United States and the UK recorded a substantial decrease in house sizes. For instance, the average new house moved down from 85 m2 unit with five rooms to a 76 m2 Unit with four rooms in both countries.
Additionally, a lot more people are moving into apartments with no garages. These contributed to the boom in the self-storage industry in the UK and the US and Australia, New Zealand, and South Africa.
Increasing Divorce Rates
The increasing divorce rates have contributed to an increase in the demand and use of self-storage. Even more alarming is that since 2013, divorce rates have increased to a record sixty-four percent. When families split, it becomes imperative for one partner to store personal possessions outside of the formerly marital home.
The self-storage industry will continually grow once the variables that drive it exists. Housing experts believe by the end of this year, the sector will record a higher revenue because of the pandemic.
As more people stay home, they will see the need to move some irrelevant items out of the home to create office space. Households with young children will also see the need to convert extra rooms into a library or study.